Canada experienced stagnant economic growth in November, with a balance between growth in services and weakness in goods-producing industries, according to recent data. Statistics Canada reported that the country’s gross domestic product remained unchanged month-on-month in November, following a 0.3% contraction in October. Analysts had predicted a slight 0.1% growth for November. The impact of U.S. President Donald Trump’s tariffs on steel, automotive, lumber, and aluminum has significantly affected output in these sectors, causing concern about the overall economy. While the negative effects have been contained within these sectors, a Bank of Canada survey revealed subdued business sentiment, decreased investments, and anticipated layoffs.
Statistics Canada’s preliminary estimate suggested a modest 0.1% growth in output for December, although the agency cautioned that this figure could be subject to revision. The lackluster performance in November resulted in a 0.5% annualized deceleration in fourth-quarter growth, falling below the Bank of Canada’s previous forecast of no growth in the final quarter of the year. If there are two consecutive quarters of contraction, it could signal a technical recession. Canada is projected to achieve a modest 1.3% full-year growth in 2025, as indicated by StatsCan. It is important to note that final reported quarterly GDP figures, based on income and expenditure, may differ from estimates derived from GDP by industry data.
In November, the growth was primarily driven by services-producing industries, which contribute approximately three-quarters of the country’s economic output. Retail trade, transportation and warehousing, and educational services were the top-performing sectors in terms of positive growth rates for November. However, the services sector saw a decline in wholesale trade by 2.1%, marking its largest contraction since April of the previous year. The growth in services was offset by a 0.3% contraction in goods-producing industries, the third decline in the last four months. Manufacturing, a significant contributor to GDP, experienced a notable 1.3% decrease, reflecting its vulnerability to trade uncertainties, U.S. tariffs, and global market conditions. Notably, the output of motor vehicles and parts manufacturing decreased by 6.4% due to a global semiconductor shortage. Additionally, the agriculture, forestry, fishing, and hunting sub-sector saw a 1.1% decline in growth during the same period.
